SYDNEY: Australia’s Qantas Airways will not fly to Emirates’ Dubai hub from next year and instead re-establish its Singapore stopover, redrawing a five-year-old alliance with the Gulf carrier to focus on Asian demand.
Qantas had made Dubai its hub for European flights under a 10-year deal it agreed with Emirates in 2012, as Qantas’s loss-making international division struggled.
But since the alliance began, Australia’s biggest airline has turned the corner, cutting costs, hiking fares and returning record profits, allowing it to switch back to the Singapore hub its customers liked better.
“Our partnership has evolved to a point where Qantas no longer needs to fly its own aircraft through Dubai,” Qantas Chief Executive Officer Alan Joyce said in a statement, adding later in a conference call that the change will free up aircraft for “expansion into Asia”.
Qantas said on Thursday it is retaining its partnership with Emirates for another five years, but the Australian airline will return to flying its flagship Sydney-London “Kangaroo Route” via Singapore and increase capacity on Melbourne-Singapore flights. It will retain more than 100 code share destinations with Emirates.
“When Qantas did the deal with Emirates its international fortunes were not attractive...they weren’t negotiating from a strong position,” said Neil Hansford, who runs consultancy Strategic Aviation Solutions.
“Me and a million others never enjoyed hubbing at Dubai. Now they’re going back to the traditional route,” Hansford said. Australian travelers generally prefer stopovers in Southeast Asia compared to Dubai because of timezone differences.
Qantas had already flagged plans to switch capacity to Asia, when it said in April it would axe its Melbourne-Dubai-London flights operated in partnership with Emirates, and fly via Perth instead.
Dropping Dubai as a destination altogether frees extra Airbus A380 and A330 aircraft for flights to Asia, where the airline’s low-cost arm, Jetstar, already operates a sizeable network and Qantas sees growing demand.
“Asia is where the growth market is. By pulling out of Singapore they basically forsook that whole thing; this transforms things incredibly,” said Peter Harbison, a former Australian aviation trade negotiator and chairman of consultancy CAPA.
Qantas said it expected a benefit of more than A$80 million a year to the airline from fiscal 2019 from the renewed alliance. Emirates said it was mutually beneficial.
Revenue sharing arrangements for the next five years of the deal were confidential, but a “continuation of what we’ve been doing until now”, Joyce said.
The airlines’ alliance is subject to government and regulatory approval in Australia.
Singapore’s Changi Airport welcomed the deal and said it would increase weekly Australia-Singapore capacity by 5.5 percent. However, Qantas has flagged cutting out stopovers altogether on the Kangaroo Route and flying to London directly from 2022.
Qantas keeps alliance with Emirates but drops Dubai for Singapore
Qantas keeps alliance with Emirates but drops Dubai for Singapore
Oil prices rise sharply after attacks in Middle East disrupt global energy supply
- Traders were betting the supply of oil from Iran and elsewhere in the Middle East would slow or grind to a halt.
- Attacks throughout the region have restricted countries’ ability to export oil to the rest of the world
NEW YORK: Oil prices rose sharply Monday as US and Israeli attacks on Iran and retaliatory strikes against Israel and US military installations around the Gulf sent disruptions through the global energy supply chain.
Traders were betting the supply of oil from Iran and elsewhere in the Middle East would slow or grind to a halt. Attacks throughout the region, including on two vessels traveling through the Strait of Hormuz, the narrow mouth of the Arabian Gulf, have restricted countries’ ability to export oil to the rest of the world. Prolonged attacks would likely result in higher prices for crude oil and gasoline, according to energy experts.
West Texas Intermediate, the light, sweet crude oil produced in the United States, was selling for about $72 a barrel early Monday, up around 7.3 percent from its trading price of about $67 on Friday, according to data from CME group.
A barrel of Brent crude, the international standard, was trading at $78.55 per barrel early Monday, according to FactSet, up 7.8 percent from its trading price of $72.87 on Friday, which had been a seven-month high at the time.
Higher global energy prices could lead to consumers paying more for gasoline at the pump and shelling out more for groceries and other goods, at a time when many are already feeling the impacts of elevated inflation.
Roughly 15 million barrels of crude oil per day — about 20 percent of the world’s oil — are shipped through the Strait of Hormuz, making it the world’s most critical oil chokepoint, according to Rystad Energy. Tankers traveling through the strait, which is bordered in the north by Iran, carry oil and gas from Saudi Arabia, Kuwait, Iraq, Qatar, Bahrain, the UAE and Iran.
Iran had temporarily shut down parts of the strait in mid-February for what it said was a military drill, which led oil prices to jump about 6 percent higher in the days that followed.
Against that backdrop, eight countries that are part of the OPEC+ oil cartel announced they would boost production of crude Sunday. The Organization of Petroleum Exporting Countries, in a meeting planned before the war began, said it would increase production by 206,000 barrels per day in April, which was more than analysts had been expecting. The countries boosting output include Saudi Arabia, Russia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria and Oman.
“Roughly one-fifth of global oil supply passes through the Strait of Hormuz, a vital artery for world trade, meaning markets are more concerned with whether barrels can move than with spare capacity on paper,” said Jorge León, Rystad’s senior vice president and head of geopolitical analysis, in an email. “If flows through the Gulf are constrained, additional production will provide limited immediate relief, making access to export routes far more important than headline output targets.”
Iran exports roughly 1.6 million barrels of oil a day, mostly to China, which may need to look elsewhere for supply if Iran’s exports are disrupted, another factor that could increase energy prices.
